ASPEN, Colo.—Brian Chesky, the co-founder and CEO of Airbnb, an online marketplace for people to rent out their homes in lieu of hotels or other accommodations, has a theory for how urban-living has progressed over the last several hundred years. The theory begins in pre-industrial villages, wends its way through the Machine Age, and arrives in cities where services like Airbnb are thriving.

"Cities used to be generally villages, and everyone was essentially kind of like an entrepreneur," he said at the Aspen Ideas Festival, which is sponsored by the Aspen Institute and The Atlantic. "You were either a farmer, or you worked in the city as a blacksmith, or you had some kind of trade. And then the Industrial Revolution happened." World War II followed, and "suddenly cities became more and more mass-produced. And we stopped trusting our neighbors."

Now, he argues, trust, mediated by technology, is making a comeback, along with the paradigm of the village. It's what's motivating millions of people in tens of thousands of cities around the world to book lodging with semi-screened strangers through his service. Choose your buzzword: the sharing economy, the peer-to-peer economy, the trust economy. Whatever you call it, it's what's propelled not just Airbnb, but also new car services like Uber and Lyft and labor services like TaskRabbit.

Airbnb

This is "the Internet moving into your neighborhood," Chesky said. "And what it really means is that people, for the first time, can become micro-entrepreneurs. They can actually build a reputation, and they can offer goods and services."

"At the most macro level, I think we're going to go back to the village, and cities will become communities again," he added. "I'm not saying they're not communities now, but I think that we'll have this real sensibility and everything will be small. You're not going to have big chain restaurants. We're starting to see farmers' markets, and small restaurants, and food trucks. But pretty soon, restaurants will be in people's living rooms."

The new services that arise in this climate won't be confined to food. "As big as Uber and Lyft are, there are going to be companies I predict that will be as big or bigger that will also disintermediate the public-bus system," he offered. "Ever been on Virgin America? Imagine you have a shuttle that felt like Virgin America—it had Wi-Fi and baristas, and it costs less than a city bus."

Chesky hopes these transformations will make us question the strange way we parcel out trust. "You trust people more than you trust anything in life—if you know them," he noted. "You'll trust your mother, your sister, your daughter, you'll trust your friends. You'll trust them more than big governments, big corporations. But a stranger—you'll trust less than anybody." Chesky's question: Why?

Chesky, of course, has an interest in emphasizing the benign and cascading consequences of the kind of trust his business depends on, especially since officials in cities like New York are now taking a hard look at whether to regulate Airbnb—and how to define, in the digital age, where the formal economy ends and the informal economy begins.

"We want to be regulated—because to regulate us would be to recognize us," Chesky said. "What we don't want is a blanket prohibition. What we don't want is people regulating us without even understanding what we are."

"If I'm going to vacation for a week, and I rent out my home, I shouldn't therefore be viewed as a hotel, have a fire marshal come to my place, have to get a series of inspections, incorporate as an LLC or a corporation, have to go through a 90-day permitting system, and do all these things to rent my place for a week," he continued. "Now, when I reach a certain threshold, maybe [that type of regulation] makes sense."

What I find most interesting, though, is that Chesky sees village-like networks sprouting in cities at a time when urbanization is also going in the polar opposite direction. More than half of the world currently lives in cities, and the United Nations predicts that two-thirds of the global population will be urban-dwellers by 2050. In 2011, there were 23 "megacities" of at least 10 million people around the world. By 2050, there will be 37. It's possible that as cities balloon to overwhelming sizes, we're coping by carving out smaller communities. But it's also possible that the phenomenon Chesky is describing is primarily playing out in Western countries. After all, Asia, where Airbnb has a relatively small presence, will account for most new megacities in the coming decades.

Cities may be shrinking in some ways, but the era of giant, mass-produced metropolises is far from over.